• Verizon Communications, the second-largest telecom operator in the US, disclosed plans to acquire IT infrastructure and cloud services provider Terremark, for $1.4 billion in cash.  The proposed acquisition of Terremark is the largest purchase by Verizon since it acquired MCI in 2005 for $6.8 billion, and that alone is a pretty telling statement. Companies don’t toss around this kind of coin unless they’re serious about grabbing a piece of a market that they know is critical to their overall strategic direction.
• Time Warner Cable announced that it has acquired Navisite, a provider of enterprise-class hosting, managed application, messaging and you guessed it – cloud  services. The $230 million acquisition brings an additional 10 data centers into the Time Warner family but most importantly “provides us [Time Warner] with a successful managed services business and a new, innovative managed cloud platform representing significant growth opportunities... for small and medium sized business.” said Time Warner Cable Chairman and CEO Glenn Britt.
• In Canada, a strong and significant build-out of pure cloud-based programs and portfolios was announced recently as MTS Allstream, Canada’s largest all-business carrier staked its claim in the market with the launch of a Cloud Data Protection Portfolio including its Cloud Replication Services.
• Australia’s Macquarie Telecom announced its entry into the cloud services market with a managed, hosted IaaS offering, explain that its decision was fuelled by an Australian government paper that encourages agencies to adopt public cloud offerings.

I enjoy reading Stephen Duplessie’s blog, “The Bigger Truth,” as I find he always has keen insight into what’s happening in the tech world.  His recent article entitled “Grow up! The new world of managing IT Stuff” really hit home (read it here http://www.thebiggertruth.com/2011/01/grow-up-the-new-world-of-managing-it-stuff/).  A comment in response to Stephen’s blog accurately captured the essence of his message – “You need to become the architect of the outcome, not the guy who fixes the leak.”

Put another way, the CTOs and IT Managers of the world need to focus on delivering strategic value instead of spending their precious time putting out fires.  So why aren’t they?  It’s not like they didn’t learn the “strategic value of IT” while at College.

I’ll tell you why, and my view stems from founding and running an IT Management Outsourcing firm for over 15 years, prior to my current position.  In my former role, I met regularly with the Presidents, CEOs and MD’s of our clients, who were mainly in the professional services, financial and legal sectors of the SME space.  Effectively, I was their CTO, with my staff members playing the role of IT managers at these companies, and here’s what I concluded:

Most CEOs see tech resources as plumbers, not architects, and as a result the senior IT staff

often aren’t given a seat at the executive table – the place where strategic decisions occur.

Smart companies and smart CEOs understand the value of IT personnel, inviting them to participate at the strategic level, and in so doing allowing them to deliver the value inherent in technology – particularly emerging technology.  They recognize that technology actually becomes a strategic differentiator to their organization.

Did you ever wonder why Walmart became the dominant force it is today when there were so many good, storied companies it had to overtake to secure its market-leading position?  The reason that I most relate to is that in the mid-80s when EDI and Just-in-time Inventory (JIT) as well as bar-coding were off the radar for many companies, Walmart grabbed on to these emerging technologies and ran with them.  The company exploded as these new technologies helped to drive down costs, control inventory and improve cash flows – quickly helping to render Walmart the lowest cost provider in the market by a mile.  The rest, as they say, is history.

Sam Walton was clearly listening to the right people: his IT staff, or rather, his “Secret Weapon”. Walton put to use the recommendations and inherent knowledge of his team, thereby creating a strategic differentiator for Walmart, company wide.

Today, we’re at the beginning of another widespread and significant technology advancement called The Cloud, and opportunities abound within it. Not just for obtaining better “plumbing”, but for securing Cloud-based services that can and will deliver strategic value to your business.  Services and capabilities that were once out of reach of many organizations, but that are now being defined as strategic differentiators.

So, if you’re one of those CEOs who leaves your head IT resource in the hallway while the Exec team meets to discuss strategy, I suggest you change your ways and make room for them at your boardroom table.  Listen to what they have to say, and my bet is that very soon you’ll have a “secret weapon” as part of your team.

So, what is it?  Well, before blurting out my lone prediction, I’d like to explain my rationale for arriving at this game-changing prognostication.

First, try and recall the state of the Cloud one short year ago?  Was it the subject of business news? Was it widely discussed in forums or conferences?  Was it even on the radar for the majority of companies?  Was its impact global in nature?  For the most part, the answers to these questions is likely “no.”  Certainly, there was strong awareness of the Cloud and movement to it, but run a Google search for technology predictions 2010, and you can see that on the last day of 2009, Cloud was not the focus.  Today, run that same Google search for 2011 predictions yields predictions that almost all include the word “Cloud” in the top 3. – a clear indication that something dramatic is happening that goes beyond the world of I.T.

The last time I witnessed this kind of technology bubble was when the Internet arrived on the business scene in the mid 90’s.  I’m certainly not comparing the Internet’s impact to the Cloud – nothing can compete with its society-changing clout – but I do see very strong parallels in terms of the rapidity in which both technologies were grasped by the market.   The Internet went from business people taking public seminars in 1993 on how the Internet could benefit their companies, to a pervasive global presence.  It transitioned from the subject of the best-selling business book in 1994 (The Internet Handbook, by Jim Carroll and Rick Broadbent) to a household word, and a worldwide phenomena.  Still, the Cloud is carving out its own unique destiny.

In 12 short months, the Cloud has transitioned from “interesting opportunity” to “must-have/must-engage/must-do” disruptive technology.  As happened in the early 90’s with the Internet, companies of all shapes and sizes throughout the globe have been forced to aggressively and decisively develop and move on their Cloud strategy.  Those that haven’t, or have been just too slow to react, will be buried by a wave of analyst/industry criticism and market rejection, and as happened in the 90’s, many companies will simply disappear.

During the past year there were several announcements that I believe provide guidance as to what we can expect in the Cloud space in the coming year.  Some of these announcements received huge publicity while others fell under the radar, but all I believe have dramatic implications.  They are as follows:

1. Amazon Announces Free Compute and Storage Resources: Mid-year 2010,  Amazon - the largest Cloud compute and Cloud storage company worldwide - announced that it would provide compute and storage instances to developers, or those looking to build applications, for free for an entire year.  Free, as in “come and get it.”  As if the continued downward price pressure provided by Amazon in the industry weren’t enough, Amazon pounded through the floor, providing Cloud Compute and storage for nothing.
    
2. Rackspace Announces OpenStack: Mid-summer, RackSpace - one of the largest Cloud Compute and Hosting companies - announced OpenStack, its “give-back” to the Cloud industry.  Essentially, RackSpace dispensed with licensing its platform for providing Compute and Storage on demand, and rendered it “Open Source” allowing everybody to use and modify it for free.  To those building out platforms to provide compute and storage this must have been one of those announcements that bowled you over. How can anybody expect to compete with “free?”  Especially with the growing list of sponsors and supporters of the OpenStack project including NASA, Citrix, Dell Intel, AMD to name a few of the larger ones.  There’s nothing on the market that beats “free.”
    
3. Apple Announces the Mac App Store: In an October media event that seemed to create little buzz, Apple’s Stephen Jobs announced that on January 6^th 2011 his company was launching the Mac App Store, modeled on its wildly successful iTunes store.  You’ve probably heard of that first App store.  It’s the one that has over 325, 000 applications available for the iPod, iPhone and iPad platforms and as of September 2010 has had over 6.5 Billion Apps download (yes that’s Billion).  If the shear numbers alone don’t startle you the average “App” selling price of $4.04 (one time!) should. 
   
   If Apple’s new Mac App Store has a tiny fraction of the success that the initial App store has garnered, I believe that the software industry will experience a tectonic shift, as the ability to immediately access a Mac-approved application of your choice for pennies to dollars will reshape the industry.  Many agree, based on the numerous postings and discussions I’ve read which project many software shops disappearing because of this dramatic market development.
    
4. Salesforce Acquires Database.com: Late fall Salesforce.com, a recognized innovator and leader in the Cloud, acquired Database.com with little fanfare or ensuing discussion.  Database.com is labeled as an enterprise competitor to Oracle DB’s, but built in a Cloud-enabled model that allows developers to use it effectively, and efficiently.  How much does it cost?  You guessed it. With a starting price of free, users are able to forgo the huge capital expense of Oracle databases by engaging a Cloud-based on-demand and cost-free service.

With cloud resources costs plummeting and in some instances disappearing, and a certainty that continued commoditization will occur, what will push leading organizations to further develop Cloud technologies?  Will we continue to see billions of dollars spent on Cloud enabling-technologies, as we did in 2010?

Here’s my assessment.

We are now in what I call the “race to zero” – the time when commodity pricing is driven so low that the only way to drive continued market value is by focusing on the value over and above the core commodity offering – the applications the commodity enables.   And when the applications start to drive the industry growth, and not the application-enabling technology, mass adoption invariably follows.

My 2011 Prediction:  The Cloud will transition from a proven commodity-focused marketplace to
one driven by value-added business applications, entrenching itself as an essential technology for companies in all industries worldwide.

Think about it.  We have seen this kind of industry metamorphosis before.  Consider the large incumbent telecom companies that have been repeatedly overwhelmed by the “race to zero” for their core commodity offerings, when everything from copper-based phone lines to long distance services to broadband networks to mobile phone fees was subjected to immense price competition from new entrants, dramatically drove down pricing.  What did the telcos look to for a source of new revenue?  Applications.  While prices plummeted from home-lines, revenues rose through introduction of value-added services like voicemail, called I.D., and Call forwarding.  When price pressures mounted in the mobile market, applications like text messaging emerged.  And where do they see deriving future value from their massive mobile customer base?  In video and further applications, and their inherent capabilities. 

The “race to zero” is well underway, and the continued commoditization of compute and storage infrastructure technologies will lead to massive investment in value-added services in 2011, layered on top of the Cloud’s resilient infrastructure.  Many companies, like Amazon, RackSpace, Apple and SalesForce.com are rising to this challenge and opportunity.  Many aren’t, and will surely pay the consequences.

I sincerely hope that your company is one on the right side of this equation.

Wishing you and yours a very happy, healthy and prosperous New Year.
Joshua Geist.

I read blogs regularly and I also happen to reside near the North American east coast in a fairly cold climate and so I found one of Skip Williams’ most recent blogs to be both highly entertaining and very insightful (read Disaster Recovery Journal, Dec 20, 2010 blog: “But This Never Happens…”).  Williams wrote about the brutal weather that much of Europe recently endured, and how most of the countries with so-called moderate climates just aren’t prepared to deal with snow.  His point is that this kind of weather is not rare in Northern Europe, and that countries and cities should be better prepared to deal with it.  Saying “it never snows here” when it clearly does every year, then lamenting the struggles that ensue because of lack of preparedness is a pattern that just doesn’t need to be repeated. 

The same principles can be applied to the business world.  I wish I had a dollar for every time I heard someone say, “Yes, I understand the inherent value in deploying in a BC/DR solution, but we’ve never had a disaster or major system outage…and so these solutions really don’t apply to us.” 

Really? 

My response is always the same.  “It’s just a matter of time…” Whether it’s a single server crash or an entire building or city that’s out of commission because of a power outage, every business will eventually experience the pain associated with a system outage.

And if my own warning doesn’t have you re-thinking your BC/DR solution, or lack thereof, maybe this interesting study will have you taking this matter more seriously (read North America's $26.5 Billion Cold by Michael Crest, SVP and GM of CA Data Management division). The study highlights the fact that North American businesses are “collectively losing $26.5 Billion in revenue each year as a result of slow recovery from system downtime.”  According to the study, key industry segments, such as financial services, lose an average $224,297 per year due to lack of preparedness for critical system outages.

I can certainly relate to this study, as I know of one local law firm who had a major system outage lasting an entire week, and estimated that it would have lost $500,000 in billing had it not been for an existing Cloud-based BC/DR solution.  Luckily for them, they didn’t take the calm before the storm as an indication that “it could never happen to them.” They were prepared, and they were amply rewarded… not a single person knew of the outage.

So, as we enter 2011, I wish you the best and truly hope that you have an excellent business year…one that sees you embracing the Cloud and all that it has to offer.

Well, it’s that time of year again, with people world-wide celebrating their holiday season of choice, and many contemplating what gifts to bestow upon their loved ones.  As usual, the latest tech toys like the Xbox Kinect are sold out everywhere, but there are a lot of great techie gifts still out there, many available at my favourite online store – you may have heard of it – The CLOUD.

The Cloud has something for everybody and, I thought it might be fun to make a list of thoughtful gifts:

1. Economy of Scale:Boys and girls everywhere know that it’s important to share, and that rule works in the Cloud too.  Businesses of all sizes now have the opportunity to dramatically reduce costs by leveraging the shared infrastructure that defines the Cloud.  Of course, just because you’re sharing doesn’t mean that you don’t have your own unique, secure, private instance in the Cloud – you do, rendering the Cloud as reliable and secure as any privately-constructed infrastructure.

2. Scalability:The Cloud doesn’t just offer the ability to easily expand as your business grows...it also gives you the ability to easily scale back your requirements when economic conditions or seasonal trends mean that your business requires fewer resources. That’s like planning a dinner for 20 people, only to learn that half of them can’t make it due a snowstorm – and you taking the turkey back to the store and exchanging it for one half the size, with your grocer cheerily accommodating your new requirements.  That’s real scalability.

3. Cost Savings:  Like most men, I’m not crazy about shopping, and when I have to, I like to get in, buy what I need, and get out.  One place I do like to shop, however, is in the Cloud.  Really, where else can you buy things like indexed, archived storage – and know that your purchase just saved you (i.e. your company) money?  No more costly infrastructure build-outs, no surprise “one-time” professional services fees when problems occur – just verifiable cost savings.

4. Cost Certainty:  I know of one company who wished they’d shopped at the Cloud store a few months back.  This financial services firm had considered replicating its server infrastructure in the Cloud (i.e. Cloud Recovery), and decided to park the project for a few months because of other pressing IT requirements. Soon after, they had a major Exchange server outage and painstakingly doled out close to $100,000 to an external consultant to fix the problem – and this didn’t include what the system downtime cost their business financially and in terms of reputation. They could have protected their Exchange environment in the Cloud for roughly 15 years (not a typo) for the “unplanned” $100,000 expenditure they were forced to endure.  Of course, they’re now gearing up to deploy recovery as a service and the fixed, monthly cost certainty it provides.

5. Time for Strategic IT work: Do you remember when you were in school and the IT professionals who were passing on their knowledge talked about the “strategic value of information technology?”  You likely had dreams of someday applying your knowledge in a way that transformed the business world, enabling your co-workers, and turning technology into competitive advantage.  Then you got the job and ended up spending 90% of your time doing mundane tasks like daily tape backup.  Well, the Cloud store can change that.  Embrace its value and you’ll soon find that the mundane stuff is well handled by the Cloud and its providers, leaving time for you to do what you were trained to do – deliver strategic advantage to your company through IT.

6. Comfortable Computing: I love this term, and the first time I heard it was in a SearchCloudComputing.Com podcast interview with FSW’s Joseph Foran.  Mr. Foran’s view is that the Cloud allows for “comfortable computing – which he defines as “end-user ease of use.”  As an IT guru, Foran gets it:  people today want to work conveniently, and not have to bother with “IT-Approved devices” to access the tools and information they need to perform their jobs.  iPhones, working from the local cafe from your iPod, or using your home PC to access your secure environment in the Cloud are all possible today, and available to all at the Cloud Store.

7. Eliminate Vendor Lock-in:  Who among us hasn’t experienced the restrictions associated with vendor lock-in – that state where companies are so married to a technology provider that they can’t move to a competing vendor without enduring significant cost and strain on the business?  So, they stay, despite in many cases not enjoying a strong customer-supplier working arrangement.  The Cloud changes that, and by using some of the tools available in this emerging space, companies can easily and quickly migrate from one vendor to another, ensuring that they are always getting the best value for their dollar. 

8. Competitive Advantage:  Be the first on your block to leverage the value inherent in the Cloud, and embrace the competitive advantage that will accrue as you cut costs, gain corporate flexibility, increase productivity and deliver continuous availability – all while your competitors are spending time on “build-it and self-manage” IT approaches that have them focused on anything but their core business. 

9. Business Transformation:  And now something for the VAR community, compliments of the Cloud– recurring revenue - or at least the opportunity to transition one’s business from a hardware and software sales/professional services operation, to one focused on delivering managed services.  Make a list of companies out there that are enabling MSPs and check it twice.  Then, put in your order for the tools you need to transition your company to a Managed Service Provider.

10. Peace of Mind (a.k.a. Business Continuity): Yes, it’s true.  The Cloud now offers any company the opportunity to rapidly deploy continuous application availability without enduring the painful, costly, time-consuming process of building an in-house solution – or establishing a dedicated, remote infrastructure through traditional means.  The Cloud even throws in a guaranteed RTO measured in minutes, not days, to further ease your mind.  So, put BC in the Cloud on your list of things to buy.  You won’t regret it.

To my many friends and followers, thanks for taking the time to read my blog this past year.  I appreciate your support and have enjoyed your feedback, and on behalf of the Geminare team, I sincerely hope that you have a great holiday season, one that leaves you fully energized to tackle the challenges that you and your company will face in the year ahead.   

The world of technology is filled with Tipping Points, where new applications and services start small, spread first by word-of-mouth, gain buzz and momentum as the media and outside world become aware of their value, and eventually explode and migrate into mainstream, everyday applications.  If you’ve seen the movie, The Social Network, which describes the founding and rapid rise of Facebook, you’ll fully relate to the concept of technology tipping points.

As we prepare to enter a new year, I believe we are on the verge of yet another tipping point, one involving the Cloud.  When this one reaches critical mass, the Cloud will become main-stream, and user adoption will explode delivering on the promise of the many pundits who project cloud-related spending in the tens of billions of dollars in the next few years (e.g. “Demand for cloud computing services will grow at more than 20 per cent over the next four years, reaching $US150 billion by 2014 – three times the market’s current size – according to Gartner).

What makes me think that the Cloud is at its tipping point?  For one, respected bloggers like David Linthicum are making intriguing predictions about what we might see in 2011 – including a bold prediction that Oracle buys Salesforce. Read David Linthicum’s Nov 29^th, 2010 blog:

http://www.infoworld.com/d/cloud-computing/oracle-buy-salesforcecom-and-other-cloud-predictions-384

It’s not so much Linthicum’s prediction that intrigues me, but the companies which he’s addressing in his prognostications.  Oracle is a major player, and when the big guys start to move into the Cloud and industry consolidation looms, things start to get serious.  Mr. Linthicum also predicts that the US Government will “get its Cloud act together” in 2011 – a sure sign that the Cloud has arrived in my view (governments aren’t exactly “early adopters”). 

It’s not only leading bloggers like David Linthicum who are seeing big changes in 2011 when it comes to the Cloud.  Others, like Kevin Komiega are writing about how giants like IBM are staking its claim in the Cloud. Read Kevin Kemiega’s Nov 2010 blog:

http://www.infostor.com/index/blogs_new/kevin_komiega_storage_blog/_archives/201011/blogs/infostor/kevin_komiega_storage_blog.html

So, Oracle’s there, IBM’s there...and if you’ve been watching television lately you will have noticed that the word Cloud is appearing in ads put out by none other than Microsoft.  And Cisco is right there with them with their announcement earlier today of a Cisco/BMC Software cloud infrastructure partnership.

All the big boys have joined the party.

The Cloud has reached its tipping point.   

Get ready for a wild ride in 2011 and beyond. 

ABOUT ME
Joshua Geist is Founder and CEO of Geminare Incorporated, a leading provider of turnkey business continuity, server replication and data protection solutions, and innovator of the Cloud “Recovery as a Service” model. A solution junkie at heart, Joshua lives, breathes and dreams all things DR Cloud-related and loves nothing better than to hear a story about how another customer experienced first-hand the tremendous value inherent in the technology that Geminare created.

Joshua lives in Toronto, with his lovely wife Liane and their three beautiful daughters, Samantha, Chloe and Alexa – with a combined age of 8! Suffice it to say that between introducing the world to Geminare’s RaaS and raising a family, Josh is a very busy guy but always seems to be reachable at jgeist@geminare.com or you can follow on Twitter @CloudRecovery.

Wang introduced the world’s first stand-alone word processor in the mid-70’s, and the company exploded.  The Wang 1200 dominated the market, and quickly emerged as the de facto standard for document processing.  According to business lore, many in the company were concerned about the competitive threat posed by computers, but the company’s founder  and controlling shareholder just wouldn’t accept that something as big as a computer (i.e. a massive back-room mainframe device) could threaten his desktop solution.  So, he did nothing and when the IBM PC arrived, Wang’s market stranglehold was broken, and the company took its first steps toward its eventual bankruptcy (in 1992).

I think this story could very easily play out again, and this time the competitive threat isn’t coming from a single device or from one powerful company.  It’s coming from an emerging technology trend that has companies of every size pursuing the economic and operational advantages afforded by the Cloud.

And my prediction: Companies that are today very strong will be weakened and could eventually fail if they do not take the cloud seriously, and embrace its capacity to change the norm and its promise.

So, what kind of companies should be concerned by the threat posed by the Cloud?  There are obvious ones, like any company that relies on selling “in-house” infrastructure, but I believe there are some less obvious companies whose businesses could be very negatively impacted by the Cloud.

Like the “technical support providers.”  I Googled this term and was presented with over 20,000 companies worldwide who make their living proving tech support to small and medium-sized enterprises.  The list certainly includes many small firms, but it also includes some very big companies whose reach is global.  So, imagine you are the leader or major shareholder in one of these larger tech support entities.  You have a thriving business, have filled a niche for many companies for many years, and have your IT support personnel on site in businesses throughout the world. 

Then, one of your long-term customers informs you that they have been approached, not by one of your traditional competitors, but by a new kind of company that makes its living in The Cloud.  Their value proposition is simple.  Don’t purchase and maintain premises-based infrastructure. Don’t worry about providing local IT support.  Forget about capital expenditure on IT.  Move everything to The Cloud, save money and receive a higher, more reliable grade of service.   You lose this account to The Cloud.  Then another and another still.  It appears that, almost overnight, your company might be in serious trouble.  So, what do you do?

I think that today’s IT Support Providers need to re-visit their current business model and find a way to embrace the Cloud, not compete with it.  They could partner with existing Cloud Providers, launch their own Cloud services, do something to get in the Cloud game and not just sit back on the sidelines watching the IT world change around them.  If they don’t embrace the Cloud, they may be reduced to MBA Case study status, like Wang. 

I believe that the major Software application providers are in a similar position to that of the IT support providers.  Ask yourself, “will companies still pay exorbitant license and maintenances fees for software solutions that require extensive, ongoing support?”  I think the answer is obvious.  They won’t if there are better, more economical options out there – and therein lies the promise of The Cloud.    As it matures, and the security and performance milestones that earlier plagued the Cloud are eliminated, Cloud-enabled, software on-demand solutions will increasingly become available, and forever change the landscape for the big software application providers.    

The emerging technology in and enabling the Cloud is creating wonderful opportunities for many new and existing companies, and it will also lead to some pain for the IT Service and Software Providers – if they let it.

The best won’t.  The rest will pay the price.

ABOUT ME
Joshua Geist is Founder and CEO of Geminare Incorporated, a leading provider of turnkey business continuity, server replication and data protection solutions and innovator of the Cloud “Recovery as a Service” model. A solution junkie at heart, Joshua lives, breathes and dreams of all things DR Cloud-related and loves nothing better than to hear a story about how another customer experienced first-hand the tremendous value inherent in the technology that Geminare created.

Joshua lives in Toronto, with his lovely wife Liane and three beautiful daughters, Samantha, Chloe and Alexa – with a combined age of 8! Suffice to say that between introducing the world to Geminare’s RaaS and raising a family, Josh is a very busy guy but always seems to be reachable at jgeist@geminare.com or followed on Twitter @CloudRecovery.